Johannessohn v. Polaris Indus. Inc.

9 F.4th 981

Riley JOHANNESSOHN; Daniel C. Badilla; James Kelley; Kevin R. Wonders; William Bates; James Pinion, individually and on behalf of others similarly situated, Plaintiffs - Appellants

v.POLARIS INDUSTRIES INC., Defendant - Appellee

State of Minnesota, Amicus on Behalf of Appellant(s)

No. 20-2347

United States Court of Appeals, Eighth Circuit.

Submitted: April 13, 2021

Filed: August 20, 2021

Counsel who presented argument on behalf of the appellants and appeared on the brief was Douglas James McNamara, of Washington, DC. The following attorney(s) also appeared on the appellant brief; Karen Riebel, of Minneapolis, MN, Andrew N. Friedman, of Washington, DC, Kate M. Baxter-Kauf, of Minneapolis, MN, Theodore J. Leopold, of Palm Beach Gardens, FL, Robert E. Gordon, of Palm Beach Gardens, FL, Steven Calamusa, of Palm Beach Gardens, FL, Eric A. Kafka, of Washington, DC.

Counsel who presented argument on behalf of the appellee and appeared on the brief was Richard C. Godfrey, of Chicago, IL. The following attorney(s) also appeared on the appellee brief; Andrew B. Bloomer, of Chicago, IL, Raymond Chris Heck, of Chicago, IL.

Before KELLY, GRASZ, and KOBES, Circuit Judges.

KOBES, Circuit Judge.

Appellants filed this putative class action alleging that Polaris Industries, Inc. failed to disclose heat defects and that this artificially inflated the price of their all-terrain vehicles. The district court¹ denied class certification because individualized questions predominated, a class action was not a superior method for litigating, and the putative classes included members who lacked standing. We affirm.

I.

Polaris makes ATVs. About 15 years ago, it began receiving consumer complaints about excessive heat in its ATVs. In 2014, the U.S. Consumer Product Safety Commission started investigating reports of several ATV fires. The CPSC preliminarily found that one model presented a "substantial product hazard" under 15 U.S.C. § 2064(a) because "the right hand side heat shield is in close proximity to, and in some cases makes contact with [the] exhaust manifold, posing a burn and fire hazard." D. Ct. Dkt. 336-23 at 2. The CPSC requested that Polaris voluntarily recall or correct the problem. In March 2017, Polaris recalled two models. CPSC also reviewed two other models, and Polaris issued a service advisory in July 2017 offering owners a close off kit to fix the problem.

Appellants bought Polaris ATVs. They sued, alleging that Polaris failed to disclose the heat defect, which "artificially inflated the market price for ATVs." D. Ct. Dkt. 66 at 2. Six plaintiffs in six states sought to certify a nationwide class under Minnesota consumer protection laws for consumers who purchased new (1) MY (Model Year) 2016–17 Sportsman 450s; (2) MY2014–17 Sportsman 570s; (3) MY2009–16 Sportsman 850s; and (4) MY2015–2016 Sportsman 1000s. Alternatively, they asked the district court to certify six statewide classes for ATV owners in California, Florida, Minnesota, Missouri, New York, and North Carolina, under the laws of each state.

The district court denied the motion for class certification for three reasons. First, the putative classes included plaintiffs who did not suffer an injury. Second, questions involving individual members predominated over questions of law or fact common to class members. Finally, the district court found that a class action was not superior to individualized methods of adjudication. The plaintiffs appealed.

II.

To certify a class, a district court must find that the plaintiffs satisfy all the requirements of Federal Rule of Civil Procedure 23(a) and one of the subsections of Rule 23(b). Hale v. Emerson Elec. Co. , 942 F.3d 401, 403 (8th Cir. 2019). "The district court has broad discretion to decide whether certification is appropriate." Smith v. ConocoPhillips Pipe Line Co. , 801 F.3d 921, 925 (8th Cir. 2015) (citation omitted). We review a district court's denial of class certification for abuse of discretion. Parke v. First Reliance Standard Life Ins. Co. , 368 F.3d 999, 1004 (8th Cir. 2004).

A.

Appellants tried to certify the classes under Rule 23(b)(3). Rule 23(b)(3) ’s predominance requirement requires courts to ask "whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues." Tyson Foods, Inc. v. Bouaphakeo , 577 U.S. 442, 453, 136 S.Ct. 1036, 194 L.Ed.2d 124 (2016) (citation omitted). "An individual question is one where members of a proposed class will need to present evidence that varies from member to member, while a common question is one where the same evidence will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide proof." Id. (citation omitted) (cleaned up). "The predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation, and goes to the efficiency of a class action as an alternative to individual suits." Ebert v. Gen. Mills, Inc. , 823 F.3d 472, 479 (8th Cir. 2016) (citations omitted) (cleaned up).

In In re St. Jude Medical, Inc. , we held that a district court abused its discretion by certifying a class of plaintiffs that alleged material misrepresentations concerning heart valve replacements in violation of the Minnesota Consumer Fraud Act. 522 F.3d 836, 841 (8th Cir. 2008). We noted that fraud cases are ill-suited for class actions because they require individualized findings on whether the plaintiffs actually relied on the alleged misrepresentation. Id. at 838. The defendants there put on evidence showing that the plaintiffs did not remember whether their doctors mentioned the unique qualities of the valve. Id. at 839. Considering this rebuttal evidence, we held that individual issues predominated over common questions. Id. at 841.

The same is true here. Plaintiffs’ nationwide class action complaint alleges violations of the MCFA, so rebuttal evidence is permitted. See St. Jude , 522 F.3d at 840. Polaris has evidence challenging how much each consumer-plaintiff relied on the alleged omissions. It showed that some of the named plaintiffs are previous Polaris owners who bought new ATVs despite earlier experiences with the alleged defect. A couple of these owners tried to sell their ATVs to third parties and said they were in excellent condition—without mentioning a heat defect. While a jury is free to reject this evidence, Polaris may present it. This will require individualized findings on reliance and is likely to make for multiple mini-trials within the class action. Because these fact issues will predominate, the district court was within its discretion to deny the motion for class certification on this basis.

B.

Appellants also argue that the district court should have certified six statewide classes for the states of California, Florida, Minnesota, Missouri, New York, and North Carolina. But at least two² of these proposed classes—Minnesota and North Carolina—require individualized fact findings on the issue of reliance. See St. Jude , 522 F.3d at 838–39 (MCFA requires a showing of reliance); see also Arnesen v. Rivers Edge Golf Club & Plantation, Inc ., 368 N.C. 440, 781 S.E.2d 1, 7 (2015) (affirming dismissal of claim under North Carolina Unfair and Deceptive Trade Practices Act because "plaintiffs have failed to sufficiently allege justifiable reliance on any omission"). Consistent with our holding above, we agree with the district court that those two statewide classes have individual questions that predominate.

C.

The Appellants say that even if classes could not be certified as Minnesota and North Carolina classes, the district court could have certified class actions for the remaining four states. Under Rule 23(b)(3), even if common questions predominate, a class can only be certified if the district court finds "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."

The district court did not abuse its discretion by denying class certification for superiority reasons. The district court found that class action was not superior because the underlying issues in the case "would present a significant risk of jury confusion and would create enormous challenges to trial management." D. Ct. Dkt. 453 at 83. This was based on the observation that the proposed classes will require application of the laws of four different states to forty-three different vehicle configurations, including at least four different engines, with changing exhaust standards through the years, and various attempts by Polaris to remedy the problems. But those are not the only concerns here. If the lead plaintiffs are any indication, a sizable portion of Polaris owners have resold their ATVs, and these sales "may have reflected different discounts that could require vehicle-specific litigation." In re Bridgestone/Firestone, Inc. , 288 F.3d 1012, 1019 (7th Cir. 2002).

Appellants argue that they have solved some of these problems by producing expert testimony on the price premium paid by purchasers, and so no individualized findings are needed. But cases are not tried on the evidence of one party. Polaris would be entitled to present contrary evidence suggesting the price premium theory does not appropriately provide proper damages figures for each specific class member. The district judge would then need to weigh how to instruct the jury to take these differing theories into account, especially as they relate to different state laws applying to different model years, different vehicle configurations, and different recall efforts. The district court was uniquely positioned to assess these management concerns and it was within its discretion to deny class certification on this basis.

Appellants also say that the district court focused too much on manageability, ignoring the other factors in Rule 23(b)(3). They argue that concentrating the litigation would...